A penny made is a penny lost

It is time to rethink the circulation of the penny.

Ronald Dixon

 

Last week, the Canadian government ended the production of its penny, announcing that it will no longer be produced by their Royal Mint. They have asked businesses to ensure that transactions do not require the use of pennies.

Although one does not often hear debate on the issue of the penny in the U.S., the elimination of the outdated coin would work within our nation’s best interests.

The primary argument for the abolition of the penny is that it costs more to make than it is actually worth. Currently, it costs 2.4 cents to produce one penny as of 2011. A counterpoint is that it would be an incredible burden on businesses to update coin-operated machinery that use the penny, but the long-term benefits of elimination outweigh the short-term costs of upgraded technology. Furthermore, most of this technology excluded penny functions in the first place, downplaying the short-term impacts. Finally, the government could help businesses purchase new coin-operated machines, which would alleviate the short-term costs from the job creators.

There are still many skeptics in the debate to get rid of the coin. Some have argued that costs would increase, due to rounding. However, a study conducted by Robert Whaples, an economist at Wake University, concluded from an analysis of approximately 200,000 trades through the U.S. that consumers and businesses would lose virtually nothing from the reform.

Pennies are ingrained into American culture — from convenient store leave-a-penny/take-a-penny bins to Benjamin Franklin witticisms — but they are impractical. When was the last time anyone made a transaction using pennies? It seems as though most make their way into piggy banks, the trash or turn into lucky pennies on the ground.

There are many other arguments for ending production of the penny. Apart from the economic benefits that the elimination would bring, I would have the comfort of knowing that my piggy bank will not have a wasted capacity due to an abundance of pennies: coins that are utterly useless.